RICHARD L. PETRICKSTATE OF LOUISIANA

HIGHER EDUCATION GOVERNANCE COMMISSIONSEPTEMBER 28, 2011

Efficiency in higher education

“TODAY’S SEEMINGLY BLEAK BUDGET ENVIRONMENT… IS “THE NEW NORMAL.”

NAVIGATING THE ‘NEW NORMAL,” THE LUMINA FOUNDATION

I. The “New Normal”

Dealing with the “New Normal”

Ration or curtail services

Muddle through to mediocrity, slowly hemorrhage

Become more strategic & productive

Dealing with the “New Normal”

Ration or curtail services

Muddle through to mediocrity, slowly hemorrhage

Become more strategic & productive

Budget-cutting is not that hard…

Any campus or state can cut its budgetMany have had to do so in the recent pastDecisions too often tend to be:

Short term Tactical Reactive Singletons

These actions do not fundamentally bend the cost curve

DEFINITION OF ‘STRATEGIC’

“IMPORTANT OR ESSENTIAL IN RELATION TO A PLAN OF ACTION”

II. Become More Strategic

Seven critical ingredients

Leadership Create vision, set goal Sustain commitment Communicate often

Management Who’s in charge? What’s the charge? Discharge the charge Communicate often

Data Uniform accounting

systems Technical devices National benchmarks Communicate often

Seven critical ingredients

Leadership Create vision Sustain commitment Communicate often

Management Who’s in charge? What’s the charge? Discharge the charge Communicate often

Data Uniform accounting

systems Technical devices National benchmarks Communicate often

Seven critical ingredients

Models Inspire action Provide guidance Sustain morale

Tolerance for ambiguity and failure Some experiments will

fail

Incentives Campuses must retain

benefits of their actions

Honorifics and public praise doesn’t hurt

Deep collaboration Campus Institution System State All public bodies

“IMITATION IS THE SINCEREST FORM OF FLATTERY.”

III. Tools

Use the C.A.S.E. method

Copy And Steal EverythingSources

Other states and campuses Foundations – especially Lumina Regional associations (MHEC and WICHE) National organizations (NACUBO, many others) Private sector partnerships

One example from Ohio

New Governor’s charge to reform public procurement

Public sector procurement and fiscal staff learn from private sector experts

Six to nine month review process

“Procurement Reform Working Group”

Chart of Prioritization According to Benefits and Ease of implementation

Chart of Prioritization According to Benefits and Ease of implementation

Scoring efficiency reforms

No. NameEase

ImplementBenefits Score

17Establish chief procurement officers in agencies

6.0 7.5 13.5

2Authorize emergency purchases in the event of contractor default

9.0 1.5 10.5

12Standardize, simplify, and reduce bidding requirements

1.5 3.0 4.5

Lumina productivity initiative

Multi-year, multi-state, multi-million initiative to help higher education thrive in the ‘New Normal’

“Four Steps to Finishing First” Performance Funding: Targeted incentives for colleges and

universities to graduate more students with quality degrees and credentials.

Student Incentives: Strategic use of tuition and financial aid to incentivize course and program completion

New Models: Lower-cost, high-quality approaches substituted for traditional academic delivery whenever possible to increase capacity for serving students

Business Efficiencies: Business practices that produce savings to graduate more students

Lumina productivity initiative

Implementation Strategy Grants to promote the Four Steps in state policy. Strategy Labs

Organize site visits to share best practices for the Four Steps,

Offer one-on-one conversations at many higher ed venues,

Provide limited special technical assistance funds National Productivity Conference – annual gathering The Knowledge Collaborative website – keeps the

conversation going among practitioners.

Other examples and resources

Maryland: Effectiveness and Efficiency Committee

Ohio: Efficiency Advisory CommitteeOhio: Prescription Drug CollaborativeTexas: Advisory Committee on Higher

Education Cost EfficienciesKuali FoundationMHEC: Property Insurance, Energy, IT

Procurement

“HOW DO I PAY FOR SOMETHING I CAN’T AFFORD?”

IV. Financing Change

Need to spend money to make money

Projects are often financially lumpyFinancing options:

Stair-step savings Performance contracts Forced reallocations, with payback Social impact bonds (?)

“YOU WIN WITH PEOPLE.”

FORMER OSU FOOTBALL COACH WOODY HAYES

V. People

Managing staff expectations and morale

Change is difficultStates and campuses need transparent,

comprehensive, and compassionate policies to help staff thrive through change, e.g., Who is retained? Who is retained and retrained? How does attrition affect staffing needs and changes? Provide sustained outplacement support? Provide severance pay?

Links

State of Ohio Procurement Reform Report: http://procure.ohio.gov/pdf/AdvantageOhio.pdf

Lumina Productivity Initiative: http://www.luminafoundation.org/goal_2025/outcomes/productivity.html

The Knowledge Collaborative: http://www.thekc.org/

Strategy Labs: http://www.collegeproductivity.org/

University of Maryland Effectiveness and Efficiency Initiative: http://www.usmd.edu/usm/workgroups/EEWorkGroup/eeproject/index

State of Ohio Prescription Drug Program: http://www.rxoc.org/newsroom.htm

The Kuali Foundation: http://kuali.org/